Coal-to-Chemicals: Another Big Industry Sells Out

An unfortunate thing happened on the way to record-high oil prices: the energy-intensive chemical industry, supposedly one of the better industries when it comes to greenhouse gas pollution, has embraced coal.

From the trade mag Chemical and Engineering:

Only a few years ago, an executive offering up the idea of making chemicals from coal would have been laughed out of the boardroom.

And now:

With oil priced at more than $100 per barrel, chemical companies are giving coal a serious look as a a feedstock.

A serious look? Wishful thinking. Industry powerhouses have already looked and they're building the giant new coal-to-chemical plants right now.

Take Shenhua, China's largest coal producer, for example. The company is erecting plants in the Chinese provinces of Inner Mongolia and Ningxia. And it’s moving ahead on a production scale comparable to the world's largest petrochemical plants -- two of many such factories in China. And several US chemical firms are right behind them.

It's a big shift.

Oil and natural gas have long been the raw materials of choice for bulk chemical production. Especially in America, where coal’s dirty reputation has prevented its use in chemicals from catching on, until now.

C&E reports on the favored technology of the day. It involves making methanol out of gasifying coal and then turning it into ethylene and propylene -- the major building blocks of today's chemical industry.

It also explains the economics behind the surge. As the industry sees it, as long as oil doesn’t sink too far below $50 per barrel, coal is a profitable option for chemical feedstock.

But lest we forget:

One of the big disadvantages of coal is that you make CO2, says Dave Witte, executive vice president of strategy consulting for the Houston-based consulting firm Chemical Market Associates Inc.

Right. And when you consider the cost of coal in terms of future economic disruptions from climate change, then the economics change, dramatically, away from coal.

It's no wonder really that coal-to-chemical is taking root in just three countries: US, China and India. Combined, the three boast half of the world’s coal reserves, and not a lick of carbon regulation. None are part of the international Kyoto protocol. None have mandatory national caps on emissions schemes.

The saving grace in the past was the industry itself. But it's clearly selling out too.

Earth2Tech is disappointed:

It’s too bad...the chemical industry has actually been one of the better industries from an emissions perspective. While US businesses have essentially held their absolute CO2 emissions steady since 1990, they are still pumping around 77 million metric tons (PDF) of CO2 into the atmosphere. (For comparison, California’s total emission are about 500 million metric tons of CO2 equivalent.)

Not bad for an enormous industry that in the US alone produces more than $600 billion a year worth of products that appear in 96% of manufactured goods.

There's a common sense way to stop the madness of spreading the use of coal to every industry that's hungry for it. Put a price tag on carbon, like we do for oil, natural gas, and other valuable commodities.

That way, we'll help to keep more of it where it belongs: in the ground.

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